Good morning. It is Thursday, November 24th.
The controversy around the World Cup in Qatar continued as German players covered their mouths during a team photo ahead of their game against Japan —which they lost in a 2-1 shocker— in protest of FIFA’s threat to punish teams that wore the “OneLove” armband symbolizing LGBTQ rights and diversity. The German Football Association said the armband was not “a political statement” and that human rights were “non-negotiable.” We’ll see how the situation unfolds as the tournament progresses and be sure to keep you updated.
- For today’s news, head down. In the meantime, tune in to these Berlin Cabaret songs, including Das Lila Lied, recorded during the Weimar Republic era and considered one of the first gay anthems.
—Can and Tanem
• The eurozone's economic contraction eased slightly in November amid cooling price pressures on firms, most notably in the manufacturing sector, an S&P Global survey showed on Wednesday, suggesting the expected recession may be shallower than feared. A preliminary reading of the Composite PMI inched up to 47.8 from 47.3 in the prior month, registering its fifth consecutive month below the 50 mark separating growth from contraction.
- Germany: Europe’s largest economy once again reported the steepest downturn, a preliminary reading of S&P Global’s monthly survey revealed. The flash Composite PMI —which tracks both the manufacturing and services sectors— rose to 46.4 in November from 45.1 in October.
- France: The eurozone's second-biggest economy contracted in November for the first time since February 2021 amid a decline in new orders and a slowdown in the service sector. The flash Composite PMI registered a reading of 48.8 from 50.2 in the previous month and below expectations of 49.5.
- The US: Business activity in the US contracted sharply in November, with output declining across both manufacturing and service sectors amid increasingly steep downturns in demand. The flash Composite PMI stood at 46.3, down from October’s 48.2, while the flash manufacturing PMI fell to 47.6 from 50.4 in the prior month, a 30-month low.
- The UK: British private sector signaled the fourth month of reduction in business activity in November as new orders recorded their sharpest decline since January 2021. The flash Composite PMI inched up to 48.3 from 48.2 in October. Manufacturing output continued to decline (45.4) at a faster pace than service sector activity (48.8).
• The EU is considering a price cap on Russian oil between $65 and $70 a barrel, according to Bloomberg sources, a level that is more generous than many expected and might have minimal impact on Moscow’s bottom line. EU ambassadors are meeting on Wednesday with the aim of approving the capping mechanism and a proposed price level.
• French utility EDF extended maintenance halts at three nuclear reactors, adding to the strain on Europe's power supply and sending month-ahead power contracts for France and Germany surging as much as 15%. The country’s grid operator has warned of potential electricity shortfalls as heating demand rises in the colder months while the utility grapples with reactor repairs.
• A "substantial majority" of Fed policymakers agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes, according to the minutes from the rate-setting committee's Nov. 1-2 meeting released on Wednesday. Wall Street's main indexes edged higher on the news while trading volume was thin ahead of the Thanksgiving holiday in the US.
- Earlier: US jobless claims rose to a 3-month high and an index of consumer sentiment declined 5% from the previous month to 56.8 in November while new home sales rebounded 7.5% to a seasonally adjusted annual rate of 632,000 units.
• Workers at China’s largest iPhone assembly factory confronted police —many in white hazmat suits and some in riot gear— over disputes about pay and sanitary conditions. On Wednesday, protesting workers were saying in a video shared over social media that Foxconn failed to honor their promise of an attractive bonus and pay package and has been implementing insufficient anti-Covid measures.
- A step back: The Zhengzhou plant, which was put under lockdown last month in line with China’s zero-Covid policy, had seen many workers flee the site after an outbreak. In order to fill positions, Foxconn held a massive recruitment drive and offered quadrupled daily bonuses.
• Uniper will need additional capital of up to €25 billion from the German government to cover future losses, the soon-to-be state-owned utility said on Wednesday. The additional authorized capital will be created by issuing new shares — to which only the government will be admitted to subscribe. The measures “will end months of uncertainty for our company and our customers,” said CEO Klaus-Dieter Maubach.
• EU countries agreed to pursue a €43 billion plan to jump-start the bloc’s semiconductor production, clearing a key hurdle in its plan to bolster the high-tech industry. The deal —backed Wednesday by EU ambassadors— would expand the scope of what chip plants are considered “first-of-a-kind” and qualify for state aid, but stops short of allowing all automotive chips to qualify for funds.
- Looking ahead… EU ministers are expected to rubber-stamp the deal at a meeting next month. The European Parliament needs to approve its own plan before the three institutions can negotiate a final agreement.
• Credit Suisse shareholders approved a €4.1 billion equity capital raise, which was first proposed last month under the lender's restructuring plan. The approval came after the Swiss bank on Wednesday announced it expects losses up to €1.5 billion in Q4, saying the "challenging" economic and market environment had an adverse effect on client activity across its business.
- On a related note: Credit Suisse clients pulled as much as €86 billion from the bank during the first few weeks of the quarter, underlining ongoing concerns over the bank’s restructuring efforts after years of scandals. The outflows were particularly pronounced at the key wealth management unit, where they amounted to 10% of assets under management.
• Germany's Chancellor Olaf Scholz pledged on Wednesday to end the country's "one-side dependence" on Russia and China for energy and trade, reimagining their commercial ties due to Russia's war in Ukraine.
- Furthermore: Germany’s parliament started its “general debate” on the 2023 budget, where Scholz said they have the energy crisis “under control” with policies like chartering floating liquified natural gas facilities and extending the life of Germany's remaining nuclear plants.
• Emergency power cuts were enacted across large parts of Ukraine after a new barrage of Russian strikes hit infrastructure, Ukraine's grid operator said. In accordance, the entire Kyiv region was left without electricity and water, while the state-run nuclear utility said it was forced to shut down 3 nuclear power plants. At least 6 civilian deaths were reported by Kyiv officials after a Russian strike hit a two-story building.
- In other news: There is evidence that Russian commanders were aware of sexual violence by military personnel in several instances in Ukraine, "and in some cases, encouraging it or even ordering it," an international criminal lawyer assisting Ukraine's war crimes probes said, according to Reuters.
- A new label: The European Parliament declared Russia to be a "state sponsor" of terrorism over its invasion of Ukraine, a first for the EU but largely a symbolic condemnation.
• UK Supreme Court ruled that Scotland does not have the power to hold a new referendum on independence without the consent of England's government, a decision that sets back the Scottish government's campaign to break away from the UK. Scotland's First Minister Nicola Sturgeon said she would respect the ruling but will continue to fight for independence, adding that country's "democratic right to choose their own future" was at stake.
⚡ Lightning Round
- Hungary's PM Victor Orban angered their eastern neighbors Romania and Ukraine by wearing a football scarf that had an image of a "Greater Hungary" map, the old imperial territory that existed before Austria-Hungary's defeat in WWI.
- Israeli police said a 15-year-old boy was killed and 14 people were wounded after two bombing attacks took place at Jerusalem bus stops. No group has taken the responsibility for the attacks, while the Islamic militant group Hamas —which rules the Gaza Strip— praised the perpetrators of the attacks.
- Heavy monsoon rains in Indonesia forced the earthquake rescue efforts to be suspended and lashed survivors in makeshift shelters, as searchings continue after Monday's 5.6 magnitude quake that killed at least 271 people.
• Meta responded to the concerns of Germany's antitrust regulator by allowing its VR headset to be used without a Facebook account, the office said. After declaring Meta's new move was of "paramount significance for competition across markets" back in May, the regulator said the tech giant will allow the device to be used with a separate Meta account, clearing the path for selling its product in Germany.
• Hive, an alternative social media app, hit 1 million users after Twitter users fleeing the platform following Elon Musk's takeover boosted its sign-ups. The alternative app —which made it to the top 20 on the US App Store over the weekend— is not a direct Twitter clone, but has combined concepts from Instagram, Twitter, and also MySpace, with a feature that lets users add music to their profiles.
- On a related note: Elon Musk is refusing to pay hundreds of thousands of dollars in travel bills accumulated by Twitter employees before he took over the company, according to the New York Times.
• Sony has more exclusive games than Xbox does, and many of its first-party titles "are better quality," Microsoft said in a court filing with the UK's antitrust regulator that was dated Oct. 31 but has recently been made publicly available. The Competition and Markets Authority is conducting an in-depth review of Microsoft's planned Activision Blizzard acquisition.
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